Lump sums from a foreign super fund

If you received a lump sum payment from a foreign super fund, you may need to pay tax on it. This depends on a number of factors, including how soon after receiving it you became an Australian resident or you stopped working.

Your lump sum may be tax-free if you receive it within six months of becoming a resident or within six months after ceasing foreign employment. Read on to see if you meet all of the criteria.

that started after you became an Australian resident and ended before you received the payment.

The lump sum amount does not exceed the amount in the fund that was vested in you when you received the payment.

Within six months of ceasing foreign employment

Your lump sum payment from a foreign super fund is tax-free if all of the following apply:

You receive the lump sum

within six months of your foreign employment being terminated, and

as a consequence of terminating your employment as an employee or as the holder of an office in a foreign country.

You were an Australian resident during the period of employment.

The lump sum relates only to that period of employment.

The lump sum is not exempt from tax under the law of the foreign country.

Your earnings or remuneration from the employment are exempt from income tax in Australia.

Termination of employment includes retirement and cessation because of death.

More than six months after gaining residency or ceasing employment

You must include in your assessable income for the year the amount of the lump sum that relates to your applicable fund earnings if you:

received the super lump sum from a foreign super fund more than six months after gaining residency or ceasing foreign employment, and

were an Australian resident when you received it.

However, you may choose to pay the lump sum into a complying super fund. You can choose to have all or part of your applicable fund earnings included in the assessable income of that fund. If you do, then the amount of the super lump sum that you will include in your assessable income is the applicable fund earnings reduced by the amount of the applicable fund earnings you have chosen to be assessed in the fund.

The remainder of the super lump sum or any part of the super lump sum that is paid into another foreign super fund is tax-free.

For information on applicable fund earnings, phone us on 13 10 20.

Including earnings as assessable income

You may choose to have all or some of your applicable fund earnings included in the assessable income of a complying super fund if you:

are an Australian resident

receive a lump sum payment from a foreign super fund more than six months after becoming an Australian resident, and

pay your lump sum into a complying super fund.

The taxable income of a complying super fund is generally taxed at a concessional rate of 15%, which may be less than the rate you would pay personally.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.